TBTIMPACTS SIXTH FRAMEWORK PROGRAMME SPECIFIC TARGETED RESEARCH PROJECT Assessing impacts of TBT on multiple coastal uses TBTIMPACTS Contract no.: INCO-CT Partner 1 ENEA – Financial Coordination

TBTIMPACTS Principles in processing financial statements  Compared to FP5, the abolishment of the concept of costs categories  Compared to FP5, reliance on audit certificates  Compared to FP5, move away from micro- management  More flexibility and autonomy to consortium.

TBTIMPACTS Principles of cost reimbursement  CONCEPT OF ELIGIBLE COSTS  Actual, economic and necessary  In accordance with the usual accounting principles of the contractor  During the duration of the project … except … drawing up the final reports … which may be incurred during the period of up to 45 days after the end of the project  Recorded in the accounts …  In case of contributions made by third parties … be recorded in the accounts of the third party

TBTIMPACTS Principles of cost reimbursement  CONCEPT OF NON-ELIGIBLE COSTS.  Any identifiable indirect taxes, including VAT or duties;  Interest owed;  Provisions for possible future losses or charges;  Exchange losses;  Costs declared, incurred or reimbursed in respect of another Community project;  Costs related to the return on capital;  Debt and debt related charges;  Excessive or reckless expenditure;  Any cost which does not meet the conditions established in Article II.19.1

TBTIMPACTS Principles of costs reimbursement   Reimbursement of eligible costs claimed by contractors   In accordance with the cost reporting models used by each contractor   Maximum reimbursement rates of eligible costs per type of activity   Approval of requested periodic reports   Subject – if required in the contract - to the submission of an audit certificate   Taking into account the receipts of the project

TBTIMPACTS New concepts – reminder Cost reporting models  FC: actual direct and indirect costs  EC contribution: usually 50 % (management 100%)  FCF (variant of FC): actual direct costs + flat rate for indirect costs (20% of direct costs minus subcontracting)  EC contribution: usually 50% (management 100%)  AC: actual additional non-recurring direct costs + flat rate for indirect costs (20% of direct costs minus subcontracting)  EC contribution: 100%

TBTIMPACTS New concepts - Cost reporting models – reminder  SMEs, non-commercial or non-profit organisations established either under public or private law, international organisations: FC/FCF  Physical persons: AC mandatory  Private companies (other than above): FC  AC: only for those non-commercial or non-profit organisations established either under public or private law or international organisations that do not have an accounting system that allows the share of their direct and indirect costs relating to the project to be distinguished.

TBTIMPACTS New concepts Cost reporting models - reminder  Direct costs for contractors using the Additional Cost model  direct costs of personnel shall be limited to the actual costs of the personnel assigned to the project where the contractor has concluded with the personnel  a temporary contract for working on Community RTD projects  a temporary contract for completing a doctorate  a contract which depends, in full or in part, upon external funding additional to the normal recurring funding of the contractor. In that case, the costs charged to this contract must exclude any costs borne by the normal recurring funding

TBTIMPACTS New concepts Cost reporting models - reminder  Partners using the AC cost reporting model will have to identify all the resources employed in the project and provide a global estimate of all their costs - not only additional eligible costs  Partners using the AC cost reporting model - exclude any direct additional costs specifically covered by contributions from third parties  Partners using the AC cost reporting model may charge permanent personnel under Management Activities under certain conditions – however for these costs no indirect costs can be claimed

TBTIMPACTS Financial reporting guidelines available at: management.htm#finguid Project reporting guidelines

TBTIMPACTSTBTIMPACTS  The financial coordinator ENEA will be responsible for the overall financial and administrative management of the consortium. It will:  act as intermediary between the consortium and the Commission;  receive all payments made by the Commission;  manage community contribution regarding its allocation between contractors and activities in accordance with the contract and decisions taken by the consortium;  receive cost statements from participants;  submit the financial report.

TBTIMPACTS  project duration 48 months  start date 1st March 2005  end date 28th February 2009  project financial reporting periods  P1: from month 1 to month 12  P2: from month 13 to month 24  P3: from month 25 to month 36  P4: from month 37 to month 48  Pre-financing is normally renewed at each reporting period Financial reports

TBTIMPACTS Submission of ‘financial’ reports  Financial reports will be submitted every year (within 45 days following the end of the respective periods) to the European Commission (EC); the yearly report (prepared by ENEA) must include: (please read “guide_reporting_in_fp6-main_en”, pag 9)  a justification of the resources deployed by each contractor, linking them to activities implemented and justifying their necessity, prepared by each contractor, arranged in aggregate form by ENEA  the Form C Financial statement set out in Annex VI, provided by each contractor for that period and sent to ENEA  a summary financial report consolidating the claimed costs of all the contractors in an aggregate form, based on the information provided in Form C, prepared by ENEA  Audit certificates, provided by each contractor(i.e month 12 and 48, as indicated pag 12 Annex I of the contract)

TBTIMPACTS Financial reports  1 month before ending the reporting period form C and all the guidelines to be followed will be available for download at  1 week before ending the reporting period each contractor shall send by e- mail to ENEA:  Draft Form C filled in  Draft of justification of cost  ENEA will start the preparation of the reports and will check for formal mistakes  2 week after ending the reporting period at latest each contractor shall send to ENEA by express mail (courier):  three form C filled and signed  Final justification of cost  Audit certificate (months 12 and 48)

TBTIMPACTS Submission of ‘financial’ reports Audit Certificates  Auditing will be done twice (i.e month 12 and 48, as indicated pag 12 Annex I of the contract);  each contractor shall provide an audit certificate (attached to Form C Financial statement) prepared and certified by an external auditor, certifying that the costs incurred during that period meet the conditions required by this contract. The cost of this certification is an eligible cost under the activity relating to Management of the consortium.  The external auditor essentially provides ‘reasonable assurance’, i.e. there is a ‘high degree of confidence that information is valid and unaltered’

TBTIMPACTS Submission of the financial statements Audit certificates  An audit certificate certifies that:  The amount of the total eligible costs omust be actual, economic and necessary for the implementation of the project; omust be determined in accordance with the usual accounting principles of the contractor; o………. ( see annex II.19 of the contract)  An audit certificate must be signed and dated. The organisation providing the certificate must clearly identified.  It is strongly recommended that the external audit or public competent officer use the model prepared by the Commission – see financial guidelines.

TBTIMPACTS Audit Certificate  Each contractor is free to choose any qualified external auditor, including its usual external auditor, provided that it meets the cumulative following professional requirements:  a) the external auditor must be independent from the contractor;  b) the external auditor must be qualified to carry out statutory audits of accounting documents in accordance with the 8th Council directive 84/253/EEC of 10 April 1984 or similar national regulations  A contractor that is a public body may opt for a competent public officer to provide an audit certificate, provided that the relevant national authorities have established the legal capacity of that competent public officer to audit that public body.  Each contractor continues to be responsible to the Commission for the costs claimed

TBTIMPACTS A periodic report on the distribution of the EC payments among contractors will be prepared by ENEA and sent to EC at completed funds transfer Further payment

TBTIMPACTS Renewal of pre-financing  Case with audit certificate – See Article 8.2 (b) of the contract (1° and 4° reports)  Within 45 days following approval by the Commission of the reports related to each reporting period:  A payment which settles the amounts justified and accepted during the reporting period  Pre-financing of 80% of the estimated Community financial contribution corresponding to the subsequent period and the first six months …  Where the amount justified and accepted for the reporting period is less than the pre-financing already paid to the consortium, that part of the pre-financing is re- qualified as a payment and the Commission shall deduct the difference from the subsequent pre-financing  Where the amount justified and accepted for the reporting period is more than the pre-financing already paid to the consortium, the pre-financing is re-qualified as a payment and the Commission shall add the difference as a complementary payment at the time of the payment of the subsequent pre-financing

TBTIMPACTS Renewal of pre-financing  Case of a reporting period without audit certificates (2° and 3° reports)  Similar wording in Art. 8.2 (b) however no ‘settlement of payment’ and Art. 8.2 (d):  Where less than 70% of a pre-financing has been used at the end of a reporting period, and …, subsequent intermediate pre- financing may be paid be only  If an audit certificate is provided …  On the basis of a complementary periodic management report …  In addition in all cases one can never pay more than foreseen in the contract

TBTIMPACTS TBTIMPACTS: example further payments  a 4 year project with a yearly reporting period;  total Community contribution is 799,841 Euro split as follows:  279,035 Euro for the first year  170,099 Euro for the second year (of which 98,952 year for the first six months of the second year)  181,839 Euro for the third year (of which 93,954 Euro for the first six months)  168,868 Euro for the fourth year (of which 112,431 Euro for the first six months)  80% pre-financing system  t0 refers to the start of the project, t1 is after 1 year, t2 is after 2 years and t3 after 3 years

TBTIMPACTS TBTIMPACTS: example further payments  At t0:  Calculation :  Pre-financing: 80% (year months of year 2) i.e. 80% of (279, ,952) = 302,389 €  Payment and accounting:  Payment: 302,389 €  Pre-financing at t0: 302,389 €  ‘Settled’ pre-financing: 0 €

TBTIMPACTS TBTIMPACTS: example further payments  At t1:  Accepted funding: 279,035 Euro  Calculation:  Renewal of the pre-financing: 80% of (year months year 3), i.e. 80% of (170, ,954) = 264,053 €  + take account of difference amount justified and accepted and pre-financing,  i.e. renewal pre-financing + (accepted – pre-financing) or 264,053 Euro + (279,035 – 302,389 ) = 240,699 €  Payment and accounting:  Payment: 240,699 €  Pre-financing: 264,053 €  ‘Settled’ pre-financing: 279,035 €

TBTIMPACTS TBTIMPACTS: example further payments   At t2:   Accepted funding: 170,099 Euro   Calculation:   Renewal of the pre-financing: 80% of (year months year 4), i.e. 80% of (181, ,431) = 294,270 Euro   + take account of difference amount justified and accepted and pre-financing,   i.e. renewal pre-financing + (accepted – pre-financing) or 294,270 Euro + (170,099 – 240,699 ) = 223,670 Euro.   Payment and accounting:   Payment: 223,670 Euro,   Pre-financing: 294,270 Euro,   ‘Settled’ pre-financing: 449,134 Euro.   At t3:   Accepted funding: 181,839 Euro   Calculation:   Renewal of the pre-financing: 80% of (year months year 5), i.e. 80% of (168, ) = 168,268 Euro   + take account of difference amount justified and accepted and pre-financing,   i.e. renewal pre-financing + (accepted – pre-financing) or 168,868 Euro + (181,839 – 294,270 ) = 56,437 Euro.   Payment and accounting:   Payment: 56,437 Euro,   Pre-financing: 168,268 Euro,   ‘Settled’ pre-financing: 630,973 Euro.

TBTIMPACTS Last payment after acceptance of final reports: 799,841- (630, ,437) = 112,431 € TBTIMPACTS: example further payments

TBTIMPACTS  ENEA should receive further payments from EC within maximum 90 days after reporting  Once received the further payments ENEA will apply the same “EC prefinancing” rules  Fund transfer will be done taking into account the breakdown of costs and the financial report of each partner  ENEA funds transfer procedure will last not less than 3-4 weeks  Moreover, partners are request to send to ENEA intermediate “no detailed” financial reports each six months (starting from month 18)  In order to check that no significant differences in budget lines are occurring TBTIMPACTS: further payments